WASHINGTON, D.C.—Senator John D. (Jay) Rockefeller IV, Chairman of the U.S. Senate Committee on Commerce, Science, and Transportation, issued the following statement today regarding the Federal Trade Commission’s (FTC) announcement of proposed regulations that will crack down on deceptive practices in the loan modification and foreclosure rescue industry.
“Mortgage rescue scams are deceptive and abusive to vulnerable consumers who are struggling to pay their mortgages,” said Chairman Rockefeller. “During a time when homeownership is especially crucial to rebuilding a stronger economy, it is outrageous that scam artists are cheating homeowners who are already in financial distress. That is why I held a hearing that highlighted foreclosure rescue fraud and the need for greater enforcement by the FTC early last year. The FTC’s proposed rulemaking is a step in the right direction to better protect consumers from foreclosure rescue scams and to get America’s homeownership back on track. I urge the FTC to act swiftly to implement the rules being proposed.”
Loan modification and foreclosure rescue businesses target consumers who are struggling to pay their mortgages and, consequently, are in danger of losing their homes. Scam artists offering such services extract upfront fees from consumers in exchange for the promise of halting foreclosure proceedings and/or favorably modifying the terms of their mortgages. However, once consumers have paid these upfront fees, the companies do little to nothing to fulfill their promises, or otherwise offer no tangible benefits; and consumers are left much worse off than before. On February 26, 2009, Senator Rockefeller chaired a Commerce Committee hearing on “Consumer Protection and the Credit Crisis” that highlighted abusive practices against homeowners that are addressed by the FTC’s proposed rulemaking.
KEY ELEMENTS OF THE FTC PROPOSAL WILL CONSIST OF:
- A ban on upfront fees before promised services are delivered to consumers;
- A prohibition on certain deceptive marketing practices; and
- Affirmative disclosures to consumers on the terms and conditions of the services offered.